Annual report pursuant to Section 13 and 15(d)

Related Party Transactions

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Related Party Transactions
12 Months Ended
Dec. 31, 2014
Related Party Transactions  
Related Party Transactions

NOTE 4 - RELATED PARTY TRANSACTIONS

 

In prior years, Joseph Fiore, CEO of the Company, and Berkshire Capital, which is controlled by Mr. Fiore, paid expenses and made advances to the Company. All expenses paid on behalf of the Company have been recorded in the consolidated statements of operations for the period incurred. The advances are unsecured, bear interest at 6% per annum and due upon demand. At December 31, 2013 $1,286,035 of principal and accrued interest was due on this loan. As of December 31, 2014, the balance due of principal and accrued interest on this note has been satisfied through a combination of the issuance of preferred stock and the forgiveness of accrued interest. See below.

 

In 2007, the Company acquired a total of 7,000,000 shares of International Oil & Gas Holdings Corp. from Berkshire Capital Management in exchange for an unsecured, demand note in the aggregate of $805,000, bearing interest at 6% per annum. At December 31, 2013 $596,614 of principal and accrued interest was due on these notes. As of December 31, 2014, the balance due of principal and accrued interest on these notes has been satisfied through the issuance of preferred stock. See below.

 

On January 5, 2012, the Company acquired 3,500,000 shares of Plandai, Inc. from Berkshire Capital Management in exchange for an unsecured demand note in the amount of $1,575,000. The note has a five year term with principal and interest due January 5, 2017. The interest rate is 6% per annum. At December 31, 2013 $1,762,900 of principal and accrued interest was due on this loan. As of December 31, 2014, the balance due of principal and accrued interest on this note has been satisfied through the issuance of preferred stock. See below.

 

On February 1, 2012, the Company acquired 3,500,000 shares of Inscor, Inc. from Berkshire Capital Management in exchange for an unsecured demand note in the amount of $3,675,000. The note has a five year term with principal and interest due February 1, 2017. The interest rate is 6% per annum. At December 31, 2013 $4,097,122 of principal and accrued interest was due on this loan. As of December 31, 2014, the balance due of principal and accrued interest on this note has been satisfied through the issuance of preferred stock. See below.

 

On May 14, 2013, the Company acquired 8,000,000 shares of Nuvilex, Inc. from Berkshire Capital Management in exchange for an unsecured demand note in the amount of $1,420,000. The note has a five year term with principal and interest due May 14, 2018. The interest rate is 6% per annum. At December 31, 2013 $1,473,570 of principal and accrued interest was due on this loan. As of December 31, 2014, the balance due of principal and accrued interest on this note has been satisfied through the issuance of preferred stock. See below.

 

On May 21, 2013, the Company acquired 8,230,637 shares of Nuvilex, Inc. from Joseph Fiore in exchange for an unsecured demand note in the amount of $1,185,218. The note has a five year term with principal and interest due May 21, 2018. The interest rate is 6% per annum. At December 31, 2013 $1,228,762 of principal and accrued interest was due on this loan. As of December 31, 2014 the balance due of principal and accrued interest on this note has been satisfied through the issuance of preferred stock. See below.

 

Interest expense of $587,294 and $535,674 was added to the principal during the year ended December 31, 2014 and the year ended December 31, 2013 respectively.

 

On December 31, 2014, the Company entered in an agreement to settle all of its outstanding notes payable and accrued interest due to related parties, which as of that date totaled $11,032,297. Pursuant to the settlement agreement, the Company issued 107,636 shares of its newly created Class A Preferred Stock in settlement of $10,763,611 in debt and accrued interest and $268,686 in accrued interest was forgiven. See Note 8.

 

A summary of the above related party transactions is presented below.

 

Related Party   Date of loan   December 31, 2014   December 31, 2013
Joseph Fiore     May 21, 2013     $ —       $ 1,228,762  
Berkshire Capital Management     May 14, 2013       —         1,473,570  
Berkshire Capital Management     February 1, 2012       —         4,097,122  
Berkshire Capital Management     January 5, 2012       —         1,762,900  
Joseph Fiore     2010 & 2011       —         1,286,035  
Berkshire Capital Management     2007       —         596,614  
              —         10,445,003  
Less: Current Portion             —         1,882,648  
Long Term Portion           $ —       $ 8,562,355  

 

During the year ended December 31, 2013, Joseph Fiore forgave $301,937 of debt originally loaned to two of the Company’s subsidiaries that are no longer operating. The Company accounted the forgiveness of the debt as an addition to paid in capital.

 

During the year ended December 31, 2014, Joseph Fiore forgave $268,686 of accrued interest on notes payable to him. The Company accounted the forgiveness of the accrued interest as an addition to paid in capital.

 

During 2014 the Company paid approximately $2,261,000 in marketing and promotional fees to a company owned by Mark McGarrity. $270,000 of the $2,261,000 was still outstanding as of December 31, 2014 and has been reported as related party accounts payable on the accompanying balance sheet. Mark McGarrity became a minority shareholder though the purchase of 2,000,000 shares at $.040 per share on December 29, 2014. See Note 7.

 

February 23, 2015, the Company acquired Franklin Networks, Inc. from Mark McGarrity and another minority shareholder. Subsequently, on March 2, 2015, Mr. McGarrity was hired as Chief Information Officer of the Company. See Note 9.